Correlation Between Sealed Air and EJF Investments

Can any of the company-specific risk be diversified away by investing in both Sealed Air and EJF Investments at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sealed Air and EJF Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sealed Air Corp and EJF Investments, you can compare the effects of market volatilities on Sealed Air and EJF Investments and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sealed Air with a short position of EJF Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sealed Air and EJF Investments.

Diversification Opportunities for Sealed Air and EJF Investments

-0.45

Correlation Coefficient

Sealed Air  EJF Investments

Very good diversification

The 3 months correlation between Sealed and EJF is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Sealed Air Corp and EJF Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EJF Investments and Sealed Air is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sealed Air Corp are associated (or correlated) with EJF Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EJF Investments has no effect on the direction of Sealed Air i.e., Sealed Air and EJF Investments go up and down completely randomly.

Pair Corralation between Sealed Air and EJF Investments

Assuming the 90 days trading horizon Sealed Air is expected to generate 2.63 times less return on investment than EJF Investments. In addition to that, Sealed Air is 1.43 times more volatile than EJF Investments. It trades about 0.03 of its total potential returns per unit of risk. EJF Investments is currently generating about 0.12 per unit of volatility. If you would invest  8,842  in EJF Investments on October 9, 2024 and sell it today you would earn a total of  3,058  from holding EJF Investments or generate 34.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.58%
Values	Daily Returns

Sealed Air Corp  vs.  EJF Investments

Sealed Air Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sealed Air Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Sealed Air is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

EJF Investments

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EJF Investments are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, EJF Investments may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Sealed Air and EJF Investments

The main advantage of trading using opposite Sealed Air and EJF Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sealed Air position performs unexpectedly, EJF Investments can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in EJF Investments will offset losses from the drop in EJF Investments' long position.

The idea behind Sealed Air Corp and EJF Investments pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.